Complete Tax

By Robert Steere, Toolkit Staff Writer

Business travel is about to get more expensive--at least from a tax perspective. The Internal Revenue Service (IRS) has issued its 2010 standard mileage rates (SMRs) used to calculate deductions for the expense of operating a vehicle for business, medical, moving or charitable purposes. Starting on January 1, 2010, most of the standard mileage rates will drop, and your allowable expense deductions will drop with them.

The SMR for business use of a vehicle will drop from 55 cents per mile in 2009 to 50 cents per mile in 2010.

The SMR for use of a vehicle for medical purposes or moving will drop from 24 cents per mile in 2009 to 16.5 cents per mile in 2010.

The SMR for use of a vehicle in the service of charitable organizations will remain the same as it has been in 2009--14 cents per mile in 2010.

The new standard mileage rates for 2010 reflect generally lower transportation costs compared to a year ago. The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. The study was conducted by Runzheimer International on behalf of the IRS. The rate for charitable use is set by law in the provision that authorizes charitable deductions.

If a taxpayer uses any depreciation method under the Modified Accelerated Cost Recovery System (MACRS), or claims a Section 179 deduction, for a vehicle when it is placed in service, then the taxpayer is not eligible to use the business SMR to deduct expenses with respect to that vehicle. In addition, the business SMR cannot be used for any vehicle used for hire, or for a fleet of more than four vehicles used simultaneously.

A Taxpayer always has the option of calculating actual costs for the use of their vehicles rather than using the standard mileage rates.

Additional details regarding the standard mileage rates are contained in Revenue Procedure 2009-54, which can be found on the IRS web site.

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Posted December 7, 2009.